“Insurable  Interest” 


and 

“Sole  and  Unconditional  Ownership ’’ 

With  Legal  References. 


Address  by  T.  H.  WILLIAMS 

Qeneral  Adjuster 

At  the  Thirty-Fifth  Annual  Meeting  of  the  Fire  Underwriters’  Association 
of  the  Pacific,  January  11,  1911. 


SAN  FRANCISCO,  CAL. 


REVISED 


JANUARY.  1913 


Press  of  Brown  & Power  Stationery  Co,.  327-335  California  st..  san  Francisco 


INDEX 


INSURABLE  INTEREST. 

Page. 

Administrators  8 

Assignee  8 

Bailee  9 

Builder  8 

Building  purchased  under  contract  8 

Consignee  9 

Contractor  (see  builder)  8 

Consignor  9 

Constable  9 

Commission  Merchant  9 

Common  Carrier  9 

Executors  (see  Administrator)  8 

Debtor  9 

Executrix  (see  Administrator)  8 

Devisee  or  Legatee  9 

Factor  10 

Guardian  10 

Husband  in  wife ’s  property  10 

Husband  as  Trustee  of  wife  10 

Husband,  building  on  wife ’s  land  10 

Homestead  10 

Installment  Lease  3-10 

Installment  Plan  3-10 

Liens  10 

Lessee  : 5-6-11 

Lessor  5-6-10 

Life  Interest  5 

Leasehold  6-11 

Laundry  man  (see  Bailee)  9 

Legatee  9 

Mortgagor  , 4-11 

Mortgagee  11 

Mortgagee  Clause  ’ 12 

Merchandise  bought  under  contract  12 

Mechanic ’s  Lien  12 

Pledgor  or  Pawner  12 

Partner  12 

Pledgee  12 

Property  purchased  on  installment  plan  12 

Property  held  on  storage  or  for  repair  4-12 


irt\b  V^'K.'GrAiq 


VJ  io']S'i 


Page. 

Keraainclerinan  12 

Eeal  property  purchased  under  contract  12 

Kents  13 

Stockholder  13 

Trustee  13 

Tenant ’s  Improvements  o 

Tenant  for  Life  5-13 

Tailor  (see  Bailee)  9 

Vendee  13 

Warehousemen  II 


SOLE  AND  UNCONDITIONAL  OWNERSHIP. 


Agent,  Knowledge  of  

Assignment  of  Policy  before  loss  

Assignment  of  Policy  after  loss  

Acceptance  of  Policy  implies  ownership 

As  interest  may  appear 

Bankruptcy  

Chattel  Mortgage  

Contract: — 

Option  not  change  of  title  

Agreement  to  convey  

• Contract  to  sell  

Purchaser  under  contract  

Contract  for  deed  

Executor  of  Estate  

Giving  possession  

Deficiency  Judgment  

Deed: — 

Bond  for  

Not  delivered  

To  secure  debt  

Absolute  on  its  face 

Conveyance  voids  policy 

Estate,  settlement  of  

Escrow  not  change  of  title  

Forfeiture  

Homestead 

Interest  not  property  insured 

Insured  sells  half  interest  

In  trust  to  defraud  creditors  


23 

18 

18 

17 

20 

20 

16 


25 

25 


25 

25 

16 

21 

22 

22 

22 

21 

19 

19 

20 

16 

18 

19 


P:59B87 


LEASED  GKOUND  

Policy  void  • 

Building'  on  

LIFE  TENANT  

Mortgage:  — 

Not  change  in  title  

Acquisition  of  title  by  Payee  

Sale  of  property  voids  policy  

ORAL  CONTRACT  

POLICY:— 

Conditions  

When  intended  to  cover  other  interests  

When  void  

Assignment  before  loss  

Assignment  after  loss  

Makes  new  contract  

How  should  be  written  (conclusion)  

Partnership  

POSSESSION:— 

Possession  and  control  gives  title  

Temporary  by  divorced  wife  

PAROL  GIFT  

RECEIVER  IN  BANKRUPTCY  

SOLE  AND  UNCONDITIONAL  OWNERSHIP:— 

What  is  

What  is  not  

TRUST  DEED  

TRUSTEE  

TEMPORARY  POSSESSION  

TAX  DEED  

TITLE  

Transferred  without  consent  of  Co 

Not  absolute  policy  void  

Under  claim  of  right  

Escrow  not  change  

Mortgage  not  change  

Option  not  change  

Trust  deed  not  change  

VENDEE:— 

In  possession  

VENDOR:  — 

Has  insurable  interest  

WILL  or  DESCENT  


Page. 

24 

24 

24 

.19-24 


15-22 

22 

22 

20 

15-16 

17 

17-18-20-22-24 

18 

18 

18 

27 

20-24 


19 

19 

20 

20 

16 

,18-25. 

15-16 


19 

19 


.19 

.18 

.20 

.20 

.17 

.21 

.15 

.21 

.15 

.21 

.21 


.19 


I 


“Insurable  Interest.” 

With  Legal  References. 

ADDRESS  BY  T.  H.  WILLIAMS, 

At  the  Thirty-fifth  Annual  Meeting  of  the  Fire  Underwriters’ 
Association  of  the  Pacific,  San  Francisco,  Cal., 

January  11,  1911. 

The  object  and  intent  of  the  fire  insurance  contract  is  to  indemnify 
against  or  for  actual  loss  under  the  policy  occasioned  by  fire  to  the 
interest  of  the  insured,  but  it  does  not  cover  speculative  interest  nor 
problematical  losses.  The  claim  must  be  for  actual  loss  in  money  value, 
and  no  more. 

All  authorities  agree  that  the  coutract  is  one  of  indemnity  simply; 
that  it  appertains  only  to  the  person  or  party  named  in  the  policy  and 
not  to  the  thing  insured;  that  it  is  not  a contract  running  with  the 
property,  real  or  chattel,  nor  forming  a subject  of  the  insurance;  that  it 
is  a personal  contract;  that  it  is  an  important  requisite  that  the  interest 
to  be  insured  must  be  a legal  and  valid  one,  made  according  to  law  and 
which  can  be  enforced;  that  it  must  be  a clear,  substantially  vested 
pecuniary  interest  and  not  a mere  expectancy  without  any  vested  right. 

The  clause  in  reference  to  the  interest  of  the  insured  in  the  policy 
contract,  California  standard  form,  reads  as  follows: 

‘‘The  company  will  not  be  liable  beyond  the  actual  cash  value  of 
the  interest  of  the  insured  in  the  property  at  the  time  of  loss  or 
damage.  ’ ’ 

This  clause  is  very  clear  and  explicit  and  it  should  eliminate  from 
your  mind  that  the  property  is  insured.  It  is  simply  the  cash  interest 
of  the  insured  in  the  property.  All  fire  insurance  contracts  contain  a 
clause  similar  to  the  one  just  read.  I quote  the  California  form  be- 
cause it  is  more  clearly  expressed. 

Civil  Code  Cal.  2,546,  2,588. 

Lynch  V.  Dalzell,  Ho.  Lords  1,729;  3 Browns  Par.  Cases,  497;  Abraham  v. 
Ins.  Co.,  U.  S.  C.  C.  Iowa.  Saddlers  v.  Badcock,  2 Atkins  R.  544;  1 Ins.  Law 
Jour.  60  2 Id  769;  Richardson  v.  Rose,  21  U.  C.  C.  P.  291;  Quarles  v.  Clayton, 


2 


INSURABLE  INTEREST 


87  Tenn.  308;  Wilson  v.  Hill,  Mass.,  66;  Disrow  v.  Jones,  Horr,  (Mich.)  Ch. 
48  Carpenter  v.  Prov.  Wash.  16  Peters  (U.  S.),  595.  May  Vol.  1,  Page  6. 

Mitchell  V.  Home  32  Iowa  421,  424;  Civ.  Code  Col.  2,588.  See  Clement  I 

Page  18  for  additional  cases.  See  Joyce  2 Page  88  for  additional  cases.  March 
Ins.,  80;  Humphreys,  176;  Milligan  v.  Eq.  Ins.  Co.,  16  U.  C.  Q.  B.  314; 

1 Philips  Ins.  106  and  186;  16  Wind.  N.  Y.  385;  N.  Y.  Code  1,366-1,370; 
32  Md.  421;  2 Pick  Mass.  249;  23  id  413;  4 Ins.  Law  Jour.  737;  Civ.  Code 

L.  C.  2,474.  2 Pick.  249  23  id  418;  Buck  V.  Cheaspeake  Ins.  Co  1.  Pet  151 

at  163;  Civil  Code  Cal.  2,549  and  2,552;  1 Philips  123,  214-215;  1 Duer.  315; 
98  Mass.  288;  9 Ins.  Law  Jour.  13;  Civil  Code  L.  C.  2,501;  Stanisiss  v.  Hart- 
ford Ins.  Co.  Ins.  Law  Jour.  625;  Ins.  Cent.  Dig.  1,646  Dec.  Dig.  646;  Joyce  2, 
Page  896.  1 Arnold  Ins.  722. 

There  are  many  classes  of  interest  which  are  insurable,  as  you  will 
see  from  the  following: 

Any  one  who  is  charged  with  the  protection  of  property,  or  has  a 
right  to  protect  it,  or  will  receive  a benefit  from  its  continued  exist- 
ence: 

Administators. 

Assignee. 

Bailee. 

Builder  under  contract. 

Common  carriers. 

Commission  merchant. 

Consignor. 

Consignee. 

Contractor. 

Creditor. 

Debtor. 

Executors. 

Factor. 

Grantor. 

Hirer. 

Endorser. 

Husband  in  wife’s  property. 

Husband  in  homestead. 

Life  interest. 

Lessee. 

Lessor. 

Mortgagee. 

Mortgagor. 


INSURABLE  INTEREST 


One  having  a lien  for  advances  or  otherwise.  ^ 

One  having  a claim  in  the  nature  of  a lien. 

One  having  a equitable  lien  with  possession. 

One  having  an  equitable  interest. 

One  having  possession  under  claim  of  title. 

Part  owner  responsible  for  whole. 

Profits. 

Pledgee. 

Pledgor. 

Receiver. 

Stockholder. 

Surety. 

Sheriff. 

Tenant  in  common. 

Trustee. 

Vendee  in  possession. 

Vendor  before  delivery  or  completion  of  sale. 

Warehouse  men. 

The  interest  of  the  assurred,  however,  must  be  stated  in  all  cases  in 
the  policy. 

As  most  of  the  above  are  well  understood  I will  deal  only  with 
those  which  appear  to  be  in  dispute. 

Installment  Lease. 

Pianos  and  furniture  are  sold  under  what  is  known  as  an  install- 
ment plan  lease.  The  title  remains  in  the  name  of  the  seller  and  the 
purchaser  has  no  title  until  the  last  payment  is  made.  He  has  no  right 
to  sell  the  property,  and  therefore  his  only  interest  is  the  amount  he 
has  paid  on  the  lease. 

In  order  to  cover  both  the  interest  of  the  seller  and  purchaser  the 
policy  should  be  made  in  both  names. 

Downs  V.  German  Alliance  Ins.  Co.  et  al  (Del.  Sp.  C.)  67  At.  Rep.  (Aug. 
1907)  146.  For  additional  decisions  see  page  10. 

Installment  Plan. 

Pianos  and  furniture  purchased  on  the  installment  plan,  or  on  an 
open  book  account,  the  purchaser  has  the  right  to  insure  for  full  value 
in  his  own  name,  and  to  recover  such  value,  but  it  is  better  to  make 
the  policy  payable  to  the  seller.  For  decisions,  see  page  10. 


4 


INSUEABLE  INTEEEST 


Real  Property  Purchased  Under  Contract. 

The  policy  should  recite  that  property  is  sold  under  contract  and 
policy  made  in  the  names  of  all  parties  in  interest;  loss,  if  any,  payable 
to  seller  or  original  owner  of  property.  For  decisions  see  page  12. 

Mortgagee. 

A very  interesting  case  was  recently  decided  by  a supreme  court 
relative  to  the  interest  of  a mortgagee.  A policy  was  issued  to  the 
owner,  with  loss,  if  any,  payable  to  the  mortgagee,  using  the  Xew  York 
standard  mortgage  clause.  The  mortgage  was  foreclosed  by  the  mort- 
gagee and  he  was  given  a sheriff’s  deed.  The  insurance  policy  was  not 
assigned  to  the  mortgagee.  The  property  was  destroyed  by  fire  and  the 
mortgagee,  now  owner  in  fee  simple,  made  claim  against  the  company. 
The  court  held  that  he  could  not  recover  under  the  policy,  as  his  in- 
terest in  the  policy  was  payee-mortgagee  only. 

Barton  Co-Operative  Bank  v.  American  Cent.  Ins.  Co.  38  Ins.  Law  Jour. 
599  Ins.  Cent.  Dig.  815;  Dec.  Dig.  328. 

Property  Held  on  Storage  or  for  Repair. 

When  liability  is  assumed  by  an  insurance  company  for  property 
held  on  storage  or  for  repair  it  should  be  for  a specific  amount,  other- 
wise the  largest  claim  for  damages  is  very  apt  to  be  on  this  item,  and 
as  fictitious  values  are  nearly  always  given,  a controversy  is  sure  to 
arise.  This  is  particularly  true  of  jewelry  stocks,  laundries,  tailor  shops, 
and  too  much  caution  cannot  be  exercised  by  the  companies. 

The  policy  contract  provides  that  the  company  is  not  liable  for 
property  held  on  storage  or  for  repair,  because  it  is  not  an  insurable 
interest.  For  decisions  see  page  9. 

Rents. 

The  owner  of  the  building  or  the  lessee  has  an  insurable  interest  in 
the  revenue  from  the  property.  The  company  is  liable  for  the  rents 
during  the  period  it  would  take  to  repair  the  building.  It  would  seem 
that  a company  would  have  the  right  to  deduct  the  cost  of  collecting 
the  rents  and  other  expenses,  but  the  courts  have  held  that  our  form 
is  a valued  policy  and  that  no  deductions  can  be  made. 

Whitney  v.  Northern  Ins.  Co.  Ins.  Law  Jour.  823.  For  additional  decisions 
see  pages  10  and  1 1. 


INSUKABLE  INTEKEST 


5 


Tenant’s  Improvements. 

The  improvement  made  by  a tenant  usually  consists  of  wall  and 
ceiling  decorations,  floor,  store  fronts  and  balconies.  They  are  attached 
to  the  building  and  cannot  be  removed  without  injury  to  the  building. 
Improvements  that  can  be  removed  are  fixtures.  There  is  no  more 
troublesome  item  than  this  to  adjust,  and  in  many  cases  it  is  paid  for 
by  the  company  insuring  the  building  and  also  by  the  company  cover- 
ing the  contents.  If  the  same  adjuster  had  both  building  and  contents 
there  would  be  little  chance  of  double  payment. 

Improvements  made  by  a tenant  belong  to  the  owner  of  the  build- 
ing, and  therefore  the  interest  of  the  tenant  is  the  use  of  such  improve- 
ments only.  The  value  to  the  tenant  becomes  less  each  year. 

To  determine  the  loss,  ascertain  when  improvements  were  made  and 
how  long  the  lease  has  to  run,  and  then  apportion  the  value  for  each 
year.  For  example:  If  the  improvements  cost  $500  and  were  made 
.Tanuary  1,  1909,  and  the  lease  expires  January  1,  1914,  if  a damage 
occurs  January  1,  1910,  the  loss  would  be  as  follows:  four-fifths  of 
$500,  or  $400. 

Tenant’s  improvements  should  be  insured  specifically,  if  at  all,  and 
the  risk  should  be  carefully  inspected  by  a special  agent  before  it  is 
finally  passed. 

Lincoln  Trust  Co.  et  al.  v.  Nathan  (St.  Louis  C.  A.)  99  S.  W.  (8  Febry. 
1907)  484.  For  additional  decisions  see  page  13. 


Life  Interest. 

A policy  covering  the  life  interest  of  the  insured  is  intended  to  and 
does  guarantee  to  protect  the  income  from  the  property  insured  to  an 
amount  not  exceeding  that  named  in  the  contract  It  does  not  con- 
template rebuilding  or  replacing,  or  in  fact,  anything  other  than  the 
loss  of  income  to  the  insured,  or  for  rent  which  might  have  to  be  paid 
during  the  life  of  the  insured. 

Griswold  defines  a tenant  for  life,  or  a life  interest  as  follows: 
‘‘Tenant  for  life  has  a freehold  interest  in  lands,  the  duration  of  which 
is  confined  to  the  life  of  some  person  or  persons,  or  the  happening  or 
not  happening  of  some  uncertain  event.  Such  interest  is  insurable  and 
its  value  in  case  of  loss  is  to  be  estimated  by  the  ordinary  life  tables.” 

To  make  it  more  clear,  we  will  assume  a policy  was  written  for 
$5,000,  covering  the  life  interest  of  the  insured  in  a two-story  building. 
A loss  occurs  and  the  building  is  completely  destroyed.  The  value  of 


6 


INSUEABLE  INTEREST 


the  building  is  ascertained  to  be  $7,500.  The  income  at  the  time  of 
the  fire  is  $35  per  month.  The  insured  is  fifty  years  old,  and  according 
to  the  life  tables  would  live  twenty  years  more.  The  income  for  twenty 
years  would  be  $8,400.  Taking  that  amount  as  our  basis,  the  loss 


would  be  as  follows: 

Income  for  20  years  ($35  X 12  X 20) $8,400 

Less  probable  repairs,  vacancy,  taxes  and  other  expenses.  2,800 

Insured’s  actual  loss $5,600 

Less  2 per  cent  discount  for  cash  ($5,600X.02x20) 2,240 

Net  loss  $3,360 


The  2 per  cent  discount  is  equal  to  5 per  cent  interest,  and  is 
figured  annually  for  twenty  years,  deductions  being  made  each  year. 
Taking  the  $3,600  at  5 per  cent  interest,  and  deducting  each  year  the 
net  income  will  pay  the  insured  the  amount  he  would  have  received 
from  the  property,  and  at  the  end  of  twenty  years  the  principal  and 
interest  are  exhausted.  This  is  all  the  insured  can  rightly  claim,  as  he 
could  not  possibly  receive  more  from  the  property,  and  therefore  this  is 
the  value  of  his  interest  in  the  building  at  the  time  the  loss  occurs. 

A life  interest  does  not  allow  the  insured  to  sell  or  dispose  of  the 
property  in  any  way.  Therefore,  the  only  interest  the  insured  has  is 
the  revenue  receivable  from  the  property  during  life. 

Schaeffer  v.  Anchor  Ins.  Co.  110  N.  W.  (Febry.  1907)  470.  For  addi- 
tional decisions  see  page  13. 


Leasehold. 

There  are  several  kinds  of  leasehold  interests,  but  I shall  deal 
more  particularly  with  the  one  which  gives  all  improvements  to  the  land 
owner  at  the  expiration  of  the  lease.  It  has  been  made  clear  that  we 
must  first  determine  what  the  cash  value  of  the  interest  of  the  insured 
in  the  property  is.  At  the  expiration  of  the  lease  the  buildings  belong 
to  the  land  owner.  Therefore,  the  insured  has  no  right  of  conveyance, 
nor  can  he  dispose  of  the  buildings  in  any  way,  and  the  only  interest 
he  can  have  in  the  property  is  the  revenue  from  it. 

A"ou  will  note  that  a life  interest  and  this  class  of  leasehold  interest 
are  very  similar,  the  only  difference  being  that  in  the  leasehold  interest 
we  have  a definite  and  undisputable  date  when  all  interests  of  the 
insured  ceases,  and  in  the  life  interest  the  time  when  the  interest  of 
the  insured  ceases  is  found  by  life  mortality  table. 


INSUKABLE  INTEEEST 


7 


All  leases  recite  that  if  the  monthly  rental  is  not  paid  for  sixty 
days  the  lease  is  terminated.  Also,  if  a tire  occurs  and  renders  the 
building  untenantable  the  lease  is  void.  It  is  then  clear  that  the  only 
loss  to  the  insured  is  his  interest  in  the  revenue  from  the  building  for 
the  unexpired  term  of  the  lease.  For  example:  A policy  is  issued  for 
$2,000  on  a two-story  building,  it  being  understood  that  the  building 
stands  on  leased  ground.  A fire  damages  the  building  $1,500,  or  com- 
pletely destroys  it.  The  building  cost  $3,000,  and  the  lease  had  thirty- 
four  months  to  run.  The  building  is  rented  for  $45  per  month  and  the 
insured  has  to  pay  a monthly  rental  of  $25  for  the  land.  The  proper 
method  of  figuring  the  loss  would  be  to  compute  the  rental  from  the 
date  of  the  fire  to  the  expiration  of  the  lease.  Then  deduct  the  rent 
of  the  land  for  the  same  period,  taxes,  insurance,  vacancy,  ordinary 
repairs  and  interest  or  discount.  For  example: 


Income  for  34  months  at  $45  per  month $1,530 

Deduct  for  rent  of  land  for  same  period  (34 X $25.00).  $850 

Deduct  for  taxes  and  insurance  120 

Deduct  for  ordinary  repairs  50  1,020 


Actual  loss  to  insured  510 

Deduct  interest  for  34  months 30.60 


Net  loss  of  insured  . $479.40 


The  damage  to  the  building  does  not  enter  into  the  loss  unless  it  is 
less  than  the  net  income  or  loss  to  .the  insured.  No  lease  requires  the 
assured  to  repair  the  building  if  a fire  has  rendered  it  untenantable,  for 
the  lease  is  then  and  there  at  an  end.  If  repairs  were  made  it  would 
have  to  be  with  the  consent  of  the  land  owner. 

A settlement  on  the  above  basis  is  fair  and  equitable  to  all  con- 
cerned. It  wmuld  not  be  just  from  an  insurance  standpoint  to  consider 
the  loss  to  be  the  damage  to  the  building  because  the  building  does 
not  belong  to  the  insured.  His  interest  is  simply  the  revenue  obtainable 
from  the  insured  property  and  the  actual  loss  to  him  is  his  loss  of 
income  from  the  property  and  that  is  the  measure  of  damage. 

If  it  were  possible  for  the  insured  to  sell  the  building  then  his 
interest  would  be  the  value  of  the  building,  less  about  75  per  cent,  as 
a building  is  not  worth  over  25  per  cent  of  its  cost  if  it  is  to  be 
moved,  and  this  should  be  added  to  the  net  revenue  from  the  building 
from  the  date  of  the  fire  to  the  expiration  of  the  lease. 

These  risks  are  very  undesirable  even  under  the  most  favorable 
conditions,  i.  e.,  a very  long  lease,  and  therefore  a definite  mode  of 


8 


INSURABLE  INTEREST 


settlement  should  be  agreed  upon.  I understand  some  companies  have 
paid  the  value  of  the  building-  when  the  lease  had  but  one  year  to  run. 
This  is  a most  excellent  settlement  for  the  insured,  but  it  is  a bad  and 
dangerous  precedent  to  establish.  For  decisions  see  Lessee,  Lessor  and 
Leasehold,  page  11. 

Since  the  first  edition  of  this  article,  the  court  in  the  ease  of 
Getchell  v.  Mercantile  and  Mfrs.  ’ Ins.  Co.  confirmed  this  method  of 
computing  Leasehold  Interests. 

The  interest  of  the  insured  seems  to  be  the  subject  of  more  con- 
troversy than  any  other  clause  in  the  policy,  and  the  courts  nearly 
always  rule  that  it  is  a question  for  the  jury,  and  yet  it  should  have 
but  one  interpretation.  The  insurance  company  does  not  cover  more 
than  the  actual  cash  interest  of  the  insured,  whatever  that  may  be, 
and  such  interest  must  be  plain  and  capable  of  proof,  or  he  has  no 
interest  whatever. 


REFERENCES: 

ADMINISTRATOR;  ADMINISTRATRIX;  EXECUTOR;  EXECU- 
TRIX; GUARDIAN:  Has  the  right  to  insure  property  for  the  benefit  of  the 
heirs.  Policy  should  be  made  in  his  name  as:  “John  Doe  Administrator  of  the 
Estate  of  James  Jones,  deceased.” 

5 Conn.  19-20;  Barb.  N.  Y.  91;  Civ.  Code  L.  C.  921. 

Joyce  2-913. 

Sheppard  v.  Ins.  Co.,  21  W.  Va.  368;  12  Ins.  L.  J.  817;  Globe  Ins.  Co. 
V.  Boyle,  21  Ohio  St.  119;  Herkinson  v.  Rice,  27  N.  Y.  163. 

ASSIGNEE:  He  being  responsible  for  the  property  may  insure  in  his  name 
for  the  benefit  of  others. 

2 Summ.  C.  C.  345;  10  Paige  Ch.  N.  Y. 

BUILDER  OR  CONTRACTOR:  Has  an  insurable  interest  to  the  amount 
of  his  lien  on  the  property  for  material  and  labor. 

Royal  V.  Stinson,  103  U.  S.  25;  10  Ins.  L.  J.,  687;  Com.  Ins.  Co.  v. 

Capitol  City,  16  Ins.  L.  J.  81  ; Stout  v.  City  Ins.  Co.,  12  Iowa  371  ; Longhurst 

V.  Star  Ins.  Co.,  19  Iowa  371;  Carter  v.  Humboldt  Ins.  Co.,  12  Iowa,  287; 

Franklin  v.  Coates,  14  Md.  285;  Planters  v.  Thruston,  93  Ala.  255;  20  Ins. 
L.  J.  746. 

BUILDING  PURCHASED  UNDER  CONTRACT:  Purchaser  has  an 

insurable  interest  to  the  amount  he  has  paid  on  contract. 

Civ.  Code  Cal.,  2,587 ; Davis  v.  Phoenix  Ins.  Co.,  1 1 1 Cal.  409. 

See  vendee  or  vendor. 


INSURABLE  INTEREST 


9 


BAILEE:  May  insure  the  property  in  his  name,  if  he  agrees  with  the 

owner  to  be  responsible  in  case  of  loss.  Policy  specially  provides  against  liability 
of  this  sort  and  if  it  is  assumed  by  a company,  it  should  be  for  a specific  amount. 
The  law  does  not  hold  a Bailee,  or  a person  with  whom  merchandise  is  left  for 
storage  or  repair,  responsible  for  safe  keeping.  See  article  page  4. 

2,  Kents  Comm.  395-451  ; Cal.  Ins.  Co.  v.  Union  Com.  Co.,  133  U.  S.  387; 
19  Ins.  L.  J.  385;  Richmond  v.  Niagara  Ins.  Co.,  79  N.  Y.  230;  Pelzer  Mfg. 
Co.  V.  Sun,  36  S.  C.  218,  153  S.  E.  562. 

CONSIGNEE:  Has  an  insurable  interest  to  the  amount  of  his  lien  and  he 
may  also  insure  for  full  value  if  he  is  responsible  to  the  consignor  for  the  total 
value  of  the  merchandise. 

3 Mass.  133;  5 Mess.  & W.  390;  Phoenix  Ins.  Co.  v.  Herfolheimer,  109 
N.  W.  Rep.  (Nov.  1906). 

CONTRACTOR:  See  Builder.  See  Liens  for  cases. 

CONSIGNOR:  Has  right  to  insure  for  full  value  of  goods  where  consignee 
has  not  insured  for  his  benefit. 

Joyce  2-930;  Hlbbert  v.  Carter,  1 Tenn.  Rep.  744.  See  Factor. 
CREDITOR:  Has  an  insurable  Interest  to  the  amount  of  his  claim. 

1 Philips  Ins.  213;  14  Md.  285;  Clark  v.  Scot.  Imp.  Ins.  Co.,  4 S.  C.  R. 
192;  Donnell  v.  Donnell,  86  Me.  518;  28  Ins.  L.  J.  371. 

CONSTABLE:  May  insure  property  Intrusted  to  him  as:  “Trustee  for 

John  Smith.” 

COMMISSION  MERCHANT : Has  an  insurable  Interest  to  the  amount 
of  his  commission  and  other  Hens.  He  may  Insure  the  full  value  if  responsible  for 
the  return  of  the  goods. 

5 Hill  N.  Y.  227;  Hough  & Peoples  Ins.  Co.,  26  Md.  398;  Phoenix  v. 
Parsons,  129  N.  Y.  86;  29  N.  E.  Rep.  87. 

COMMON  CARRIER:  Has  an  insurable  Interest  to  the  amount  of  the 
transportation  charges. 

N.  Y.  Code  1,368;  1 Philips  Ins.  166-220;  Minn.  St.  P.  & M.  R.  R.  V. 
Ins.  Co.,  64  Minn.  61;  25  Ins.  L.  J.  252;  Commonwealth  v.  Ins.  Co.,  122  Mass. 
136;  Cal.  Ins.  Co.  v.  Compress  Co.,  133  U.  S.  387;  19  Ins.  L.  J.  385. 

DEBTOR:  Has  a right  to  Insure  if  he  has  any  Interest  after  payment  of 

debt. 

Eng.  L.  & Eq.  503;  13  Gray  Mass.  431;  16  Ins.  Law  Jour.  227. 
DEVISEE  OR  LEGATEE:  Has  an  insurable  Interest  only  after  death  of 
testator. 

1 Arnold  Ins.  262;  Angell  Ins.  18;  Cowper  R.  588. 

EXECUTOR:  See  Administrator. 

EXECUTRIX:  See  Administrator. 


10 


INSUEABLE  INTEEEST 


FACTOR:  Has  an  insurable  interest  for  advances,  expenses  and  commis- 

sions, and  he  can  also  insure  goods  for  their  full  value,  but  policy  must  state  his 
interest  clearly. 

Angill  Ins.  497-510;  1 Arnold  Ins.  145;  Joyce  2-931;  623  and  624;  Put- 
nam V.  Mercantile  Ins.  Co.,  5 Met.  (Mass.)  386;  Russel  v.  Union  Ins.  Co.,  1 
Wash  C.  C.  400;  Rudolph  v.  Ware,  3 Cranch  U.  S.  503;  also  see  Consignee. 

GUARDIAN : Has  the  right  to  insure  property  in  his  name  for  the  benefit 
of  a minor  as:  “John  Doe,  Guardian  of  Mabel  Jones.” 

1 Johns  Ch.  N.  Y.  90. 

HUSBAND  IN  WIFE’S  PROPERTY:  If  separate  property  of  wife  he 
has  no  insurable  interest;  but  if  it  is  community  property  he  has  an  Insurable 
interest. 

2 Joyce  1,049;  Clark  v.  Dwg.  House  Ins.  Co.,  81  M.  373,  17  Atl.  Rep. 
303;  Merritt  v.  Farmers  Ins.  Co.,  42  Iowa  II;  Aetna  v.  Resh.,  40  Mich.  241; 
Jacobs  V.  Ins.  Co.,  52  S.  C.  110,  29  S.  E.  533;  27  Ins.  L.  J.  715;  Horsch  v.  Ins. 
Co.,  77  Wis.  4,  45  N.  W.  945,  19  Ins.  L.  J.  993;  Barracliff  V.  Ins.  Co.,  45  N.  J. 
543;  13  Ins.  L.  J.  190. 

HUSBAND  may  insure  property  as  Trustee  of  wife. 

So.  Mut.  Ins.  Co.  V.  Turnby,  100  Ga.  298;  27  Ins.  L.  J.  57. 

HUSBAND  has  an  insurable  interest  in  building  erected  on  his  wife’s  land. 
Abbott  V.  Hampden  Ins.  Co.,  30  Me.  414;  Rohrbach  v.  Germania,  62  N.  Y. 
47;  Continental  v.  Wingfield,  32  Tex.  194,  73  S.  W.  847. 

HOMESTEAD:  Should  be  Insured  in  the  name  of  all  parties  in  Interest. 
Reynolds  v.  Iowa  Ins.  Co.,  80  Iowa  563,  46  N.  W.  659. 
INSTALLMENT  LEASE:  (Where  title  remains  in  Seller.)  The  pur- 
chaser has  an  insurable  interest  to  the  amount  he  has  paid  on  the  lease. 

Mieball  v.  St.  Louis  Mut.  F.  & M.  Ins.  Co.,  17  Mo.  App.  23;  Davis  v. 
Phoenix  Ins.  Co.  111.  Col.  409;  Westchester  v.  Weaver,  70  Md.  536;  Kart- 
lander  V.  Elston,  52  Fed.  Rep.  180,  2 C.  C.  A.  557;  Phoenix  Ins.  Co.  v.  Public 
Packs.  Imp.  Co.,  63  Ark.  187;  Ehrsam  v.  Phenix,  43  Neb.  554,  61  N.  W.  Rep. 
899. 

LIENS:  One  may  Insure  property  to  the  amount  of  his  lien  provided  it  is 
legal. 

1 Mason  127;  3 id  255;  4 Ins.  Law  Jour.  741;  Joyce  2-996;  Protection 
Ins.  Co.  V.  Hall,  15  B.  Mon.  Ky.  411;  Mitchell  v.  Home  Ins.  Co.,  32  Iowa 
431  ; German  Fire  Ins.  Co.  v.  Thompson,  43  Karr;  567  Ins.  Law  Jour.  884; 
Pac.  Dep.  608. 

LESSOR:  One  having  an  interest  in  rents,  either  as  owner,  lessee  or  sub- 
lessee, has  insurable  interest. 


INSUEABLE  INTEREST 


11 


Franklin  Ins.  Co.  v.  Drake,  2 B.  Monroe  Ky.  45;  Bennett  Fire  Ins.  Cases 
98  and  490;  Ins.  Law  Jour.  823;  Ins.  Cent.  Dig.  358;  Dec.  Dig.  173. 

LESSEE:  Has  an  Insurable  interest  as  sub-lessee  or  in  the  buildings  which 
he  may  erect  or  in  the  improvements  made  by  him. 

7 Ins.  Law  188-449;  Fowle  et  al.  v.  Springfield  s.  Jud.  C.  Mass.  112  Mass.; 
Phila.  Tool  Co.  V.  Ins.  Co.,  132  Pa.  St.  236,  19  Atl.  77;  Hand  v.  Ins.  Co., 
57  N.  Y.  41;  Lawrence  v.  St.  Marks  Ins.  Co.,  43  Barb.  479;  Niblo  v.  North 
America,  1 Sandf.  551;  Imperial  Ins.  Co.  v.  Murray,  73  Pa.  St.  12. 

Where  the  party  buys  a lease  from  a lessee  and  pays  a bonus  for  the  same, 
he  has  an  insurable  interest.  The  loss  would  be  figured  as  follows:  If  $10,000 
was  paid  Jan.  1,  1909,  and  lease  had  five  years  to  run  and  fire  occurred  Jan.  1, 
1911,  then  loss  would  be  three-fifths  of  10,000,  or  $6,000.  It  must  be  deter- 
mined that  the  amount  paid  was  for  the  lease,  over  and  above  the  yearly  rental 
and  not  for  good  will. 

LEASEHOLD:  Where  a building  is  erected  on  leased  ground  by  the  lessee 
and  he  agrees  with  the  lessor  to  leave  the  building  in  good  condition  at  the  ex- 
piration of  the  lease,  the  company  is  liable  for  the  loss. 

Insurance  covering  the  difference  between  the  amount  the  lessee  pays  and  the 
amount  he  claims  he  would  have  to  pay  in  case  of  the  termination  of  his  lease 
should  clearly  define  the  contract  and  contain  a clause  allowing  the  deduction  of 
a stipulated  sum  each  month. 

There  is  no  way  of  determining  beyond  question  of  doubt,  the  actual  loss  to 
the  insured  and  any  Interest  which  is  subject  to  doubt  is  rarely  acceptable. 

In  the  recent  case  of  Getchell  v.  Ins.  Co.  the  court  held  that  the  value  of  the 
unexpired  time  is  the  measure  of  loss.  The  difference  between  the  reasonable 
rental  value  and  the  rental  cost  to  Insured. 

(Maine)  41  Ins.  L.  J.  1,482. 

LAUNDRYMAN:  See  Bailee. 

LEGATEE:  See  Devisee.  , 

LIFE  INTEREST:  See  Tenant  for  Life. 

LEASEHOLD:  See  Lessee. 

MORTGAGOR:  May  Insure  property  with  loss  payable  to  Mortgagee. 

Cent.  Dig.  148;  Dec.  Dig.  115;  2 Joyce  1,028-1,029. 

MORTGAGEE:  May  insure  property  in  his  name  as  Mortgagee  to  the  full 
value  of  the  debt.  All  policies  should  be  made  in  the  name  of  the  Land  Owner 
with  loss,  if  any,  payable  to  Mortgagee  in  order  to  prevent  double  insurance  and 
misunderstandings. 

2 Peters  U.  S.  25;  1 Adm.  Mass.  311;  3 id  362;  8 Paige  Ch.  436  Civil 
Code  Cal.  2,541  ; Bergan  v.  Builders  Ins.  Co.,  28  Cal.  541  ; Parks  v.  Hartford, 
100  Mo.  373,  12  S.  W.  1,058;  19  Ins.  L.  J.  364,  Buch  v.  Phoenix,  76  Me.  586,  14 


12 


INSURABLE  INTEREST 


Ins.  L.  J.  412;  Mix  v.  Andes  Ins.  Co.,  9 Hun.  397;  Davis  v.  Quincy  Ins.  Co.,  10 
Allen  113;  Kellar  v.  Merchants,  7 La.  Ann.  29; 

MORTGAGEE  CLAUSE:  Placing  a Mortgagee  Clause  on  the  policy  makes 
a new  contract  as  far  as  the  Mortgagee  is  concerned. 

Civil  Code  Cal.  2,542. 

MERCHANDISE  BOUGHT  UNDER  CONTRACT:  Purchaser  has  an 

insurable  interest  to  the  amount  he  has  paid  on  contract. 

Michael  V.  St.  Louis  Mut.  Fire  Ins.  Co.,  17  Mo.  App.  23  Davis  v.  Phoenix  Ins. 
Co.,  1 1 1 Cal.  409. 

MECHANICS  LIEN:  A party  furnishing  labor  or  material  for  the  con- 
struction of  a building,  has  an  insurable  interest  to  the  value  of  such  labor  or 
material. 

12  Iowa  271  ; 19  id  364;  15  B.  Monroe  Ky.  41 1 ; 14  Md.  285. 

PLEDGOR  OR  PAWNER:  Has  the  right  to  insure  property  so  long  as  the 
right  of  redemption  remains. 

Civ.  Code  L.  C.  2,016;  1 Stock,  N.  J.  667;  15  Mass.  389-534. 

PARTNER:  Has  an  Insurable  interest  in  the  entire  stock  or  property  of  the 
firm  or  company.  His  interest  should  not  be  insured  separately  without  stating  what 
that  interest  is. 

15  Wend.  N.  Y.  187;  2 Duer  Ins.  22-24;  2 Caines  N.  Y.  203. 

PLEDGEE:  Has  an  insurable  Interest  to  the  amount  of  his  advances. 

16  N.  Y.  397;  15  Mass.  389-534;  Denio  N.  Y.  227. 

PROPERTY  (Real)  PURCHASED  ON  THE  INSTALLMENT  PLAN: 

Purchaser  has  an  insurable  interest  to  the  amount  he  has  paid  on  the  contract. 

Civ.  Code  Cal.  2,587;  Davis  v.  Phoenix  Ins,  Co.  Ill  Cal.  409.  See  Real 
Property. 

PROPERTY  HELD  ON  STORAGE  AS  FOR  REPAIRS:  See  Bailee. 
PROFITS:  May  be  insured  as  such.  They  are  not  insured  unless  specifically 
mentioned. 

Niblo  V.  Insurance  Co.  of  North  America  1 Sandf,  551. 

REMAINDERMAN : Has  an  insurable  interest. 

Redfield  v.  Holland  Purchase  Co.  56  N.  Y.  354;  15  Am.  Dec.  424;  Kearney 
V.  Kearney  17,  N.  J.  Cq.  505  Fireman’s. 

RECEIVER:  May  insure  property  in  his  name  as  Receiver  for  the  benefit 
of  creditors. 

1 Johns  Ch.  N.  Y.  57;  2 Duer.  N.  Y.  652. 

REAL  PROPERTY  PURCHASED  UNDER  CONTRACT:  Purchaser 

has  an  Insurable  interest  to  the  amount  he  has  paid  on  contract: 

Civ,  Code  Cal.  2,587:  Davis  v.  Phoenix  Ins.  Co.,  Ill  Col.  409;  Gorsch  v, 
Phoenix  Ins.  Co.,  Ins.  Law  Jour.  1,320  Brighton  Beach  Racing  Ass’n  v.  Home  Ins. 


INSUKABLE  INTEREST 


Co.,  I 13  App.  Div.  728,  99  N.  Y.,  Supp.  219;  Watts  v.  Phoenix  Ins.  Co.  Ins.  Law 
Jour.  1,329.  Dunphy  v.  Commercial  Union  Assurance  Co.,  41  Ins.  L.  J.  441  ; 
Adams  V.  North  America  Ins.  Co.  41  Ins.  L.  J.  473;  also  see  Vendor  and  Vendee. 
RENTS:  See  Lessor  and  Lessee. 

SHERIFF : May  insure  property  entrusted  to  his  care  as  trustee. 

26  N.  Y.  117;  Civil  Code  L.  C.  1,485.  Ins.  Co.  v.  Chase  U.  S.  5 Wall.  509; 
People  V.  L.  & L.  & G.  Ins.  Co.  2 T.  & C.  268; 

STOCKHOLDER:  May  insure  the  corporate  property  to  the  extent  of  his 
stockholder’s  interest  only. 

20  Ohio  174;  Joyce  2,935;  Aetna  v.  Kennedy  Ins.  Law  form  1,019  Ins.  Cen’t. 
Dig.  151:  Dec.  Dig.  115.  Crawford  v.  Ins.  Co.  100  111.  App.  454,  65  N.  E.  134; 
Riggs  V.  Commercial  Ins.  Co.  125  N.  Y.  7,  20  Ins.  L.  J.  107;  Seaman  v.  Ins.  Co.  18 
Fed.  Rep.  250,  14  Ins.  L.  J.  97;  Warren  v.  Davenport  Ins.  Co.  31  Iowa  464; 
TRUSTEE:  May  insure  property  in  his  name  as  trustee. 

Civil  Code  Cal.  2,589  N.  Y.  Civ.  Code  1,403;  1 Philips  Ins.  219;  45  N.  Y. 
454;  Kent  Comm.  311-418;  Civ.  Code.  L.  C.  981a;  See  Joyce  2-832  for  addi- 
tional cases. 

TENANT:  May  Insure  Improvements  made  by  him.  See  Tenant  Improve- 
ments page  5.  See  Lessee  pages  1 0 and  1 1 . 

TAILOR:  Dyeing  and  Cleaning  Establishments.  See  Bailee. 

TENANT  FOR  LIFE:  May  Insure  property  to  the  amount  he  would  receive 
from  same  during  his  life. 

2 Grat.  Va.  408;  30  Me.  414;  3 Ins.  Law  Jour.  928;  Seaman  v.  Anchor  Fire 
Ins.  Co.  128  N.  W.  (Iowa)  934,  Home  Ins.  Co.  v.  Field  42  111.  App.  392;  23 
Clei;  Leg.  News.  122.  Schaeffer  v.  Anchor  Ins.  Co.  1 10  N.  W.  (Febry.  1907) 
470.  See  Remainderman.  Getchell  v.  Ins.  Co.  41  Ins.  L.  J.  1482; 

VENDEE:  Has  the  right  to  insure  if  liable  for  value  of  goods.  Has  right 
to  insure  real  property  but  policy  should  be  made  in  the  name  of  Vendor  stating 
that  property  is  being  purchased  by  Vendee  under  contract. 

8 Ins.  Law  Jour.  134:  1 Philips  Ins.  108-116,  16  Ins.  Law  Jour.  129;  Civil 
Code  Cal.  2,587;  Davis  v.  Phoenix  Ins.  Co.  Ill  Col.  409;  Gorsch  v.  Phoenix  Ins. 
Co.,  Ins.  Law  Jour.  1,320:  Brighton  Beach  Racing  Ass’n  v.  Home  Ins.  Co.  113 
App.  Div.  728,  99  N.  Y.  Supp.  219;  Watts  V.  Phoenix  Ins.  Co.,  Ins.  Law  Jour. 
1,329.  See  Joyce  2-977  additional  cases. 

Has  a right  to  insure  real  property  for  full  value,  where  he  is  in  possession. 
Brooks  V.  Erie  Ins.  Co.  76  App.  Div.  275,  78  N.  Y.  Supp.  748;  Tyler  v. 
Aetna  Ins.  Co.  16  Wend.  385,  12  Wend.  507;  McGivney  v.  Phoenix  Ins.  Co.  1 
Wend.  85;  Duprey  v.  Delaware  Ins.  Co.,  63  Fed.  Rep.  680,  24  Ins.  L.  J.  161; 
Grange  Mill  Co.  v.  Western  Assur.  Co.  118  III.  396,  16  Ins.  L.  J.  129; 

Has  a right  to  insure  if  liable  for  full  value  of  personal  property. 


14 


INSURABLE  INTEREST 


Has  a right  to  Insure  personal  property  under  conditional  contract  of  sale. 

Bohn  V.  Sawyer  169  Mass.  477,  48  N.  E.  Rep.  620;  Redd  v.  Williamsburg 
City  Ins.  Co.  75  Me.  537;  Holbrook  v.  Phoenix  Ins.  Co.  25  Minn.  229;  Little  v. 
St.  Paul  123  Mass.  380; 

Has  a right  in  property  transferred  to  defraud  creditors. 

Forrester  v.  Gill  11  Colo.  App.  410,  53,  Pac.  Rep.  230; 

VENDOR:  Has  an  Insurable  Interest  before  the  delivery  of  goods,  also  has 
an  Insurable  Interest  in  real  property  for  balance  of  contract  price,  but  policy  must 
show  property  being  purchased  under  contract.  Policy  should  be  in  both  names. 

16  Wend.  N.  Y.  385;  1 Philips  Ins.  110  Joyce  2-963:  Norcross  v.  Ins.  Co.  17 
Pa.  St.  429:  55  Am.  Dec.  571.  Hamilton  v.  Ins.  Co.  97  Mich.  535,  23  Ins.  L.  J. 
339;  Gultermann  v.  Ins.  Co.  Ill  Mich.  626,  26  Ins.  L.  J.  727;  Morrison  v.  Ins.  Co. 
18  Mo.  262;  Hill  V.  Ins.  Co.,  59  Pa.  St.  474;  Wood  V.  Ins.  Co.,  46  N.  Y.  421; 
Redfield  V.  Holland  56  N.  Y.  354;  Walsh  v.  Ins.  Co.,  127  Mass  383; 

WAREHOUSEMEN:  Has  an  insurable  Interest  to  the  extent  of  freight  and 
charges  paid,  advances  made  and  for  storage. 

12  Johns  N.  Y.  232;  2 Wend.  N.  Y.  593;  Civ.  Code  L.  C.  5,545;  4 Ind.  368. 

Liability  for  loss  by  fire.  “No  warehouseman  or  other  person  doing  a general 
storage  business  is  responsible  for  any  loss  or  damage  to  property  by  fire  while  in 
his  custody,  if  he  exercises  reasonable  care  and  diligence  for  its  protection  and 
preservation.” 

Civil  Code  Cal.  1 ,858e.  He  may  Insure  property  in  his  care,  however,  for  the 
benefit  of  the  owners,  but  the  policy  must  so  state. 


“Sole  and  Unconditional  Ownership” 

REAL  PROPERTY. 


PROPER  CONSTRUCTION  OF  CLAUSE:  The  words  “Sole  and  uncon- 
ditional ownership”  are  clear  and  plain  as  it  is  possible  to  make  them.  It  would 
seem  that  but  one  construction  could  be  placed  upon  them,  1.  e.  that  no  one  other 
than  the  insured  had  any  Interest,  of  any  nature,  in  the  property  Insured.  Such 
however,  is  not  always  the  construction  placed  upon  the  clause  by  the  courts  and 
the  purpose  of  this  paper  is  to  give  the  various  interpretations,  that  every  safeguard 
may  be  given  the  Insured  as  well  as  to  the  Insurance  Company. 


SOLE  AND  UNCONDITIONAL  OWNEESHIP 


15 


GENERAL  RULE  UPON  WHICH  COURT  DECISIONS  ARE 

BASED:  The  general  rule  upon  which  most  court  decisions  are  based  is — that  the 
one  upon  whom  the  loss  would  fall  or  the  one  who  is  responsible  for  the  restoration 
of  the  property,  either  in  like  kind  or  money,  is  the  sole  and  unconditional  owner. 
Their  construction  of  this  simple  rule  is  as  varied  as  the  sunset.  They  do  agree, 
however,  that  when  the  agent  had  knowledge  of  the  facts,  the  company  is  liable. 
An  insured,  under  the  above  rule,  need  not  have  any  monetary  Interest  in  the 
property  Insured.  It  is  enough  if  he  is  responsible  for  its  restoration. 

INSURANCE  COMPANIES  POSITION:  Insurance  Companies  do  not, 
as  a rule,  stand  upon  or  take  advantage  of  technicalities  in  a policy  when  the  loss 
is  an  honest  one;  but  where  the  claim  is  fraudulent,  we  should  be  able  to  defeat  it 
by  standing  squarely  upon  the  conditions  of  the  contract. 

INSTALLMENT  PLAN— RIGHTFUL  OWNER:  If  a party  having  a 

small  Interest  in  a property,  as  is  so  often  the  case  where  it  is  being  purchased  on 
the  installment  plan,  were  allowed  to  Insure  and  collect  the  full  value  in  case  of 
loss  by  fire,  it  would  be  the  means  of  creating  a moral  hazard  that  must,  inevitably, 
result  in  a very  much  increased  loss  ratio.  It  therefore  becomes  of  vital  importance 
to  our  business  to  know  who  are  the  rightful  owners  and  whether  the  insured  is 
the  sole  and  unconditional  owner,  and  is  the  one  upon  whom  the  entire  loss  would 
fall  or  if  others  are  interested.  Public  safety  forbids  that  conflagrations  should  be 
made  profitable. 

PROVISION  IN  POLICY : The  provision  in  the  policy  contract,  regarding 
ownership,  is  reasonable  and  just,  and  most  courts  hold  that  it  is  valid,  and  a ful- 
fillment of  the  condition  must  be  complied  with;  but  their  opinion  as  to  what  is  a 
full  compliance  does  not  always  agree  with  what  we  know  to  be  the  intention  of 
the  clause.  It  is  a question  that  is  more  often  left  to  the  jury  and  their  decision  is 
based  largely  upon  what  the  insured  testifies  to. 

MORTGAGE  OR  TRUST  DEED:  Giving  a mortgage  or  trust  deed  to 
secure  a loan  on  real  property  is  not  a change  of  title  that  will  avoid  the  policy. 
The  owner  or  mortgagor  of  the  real  estate,  can  only  dispose  of  the  property  subject 
to  the  mortgage  and  this  of  itself  proves  that  his  interest  is  not  sole  and  unconditional. 
He  can  however,  sell  or  convey  his  interest  or  equity  without  notice  to  or  consent  of 
the  mortgagee.  He  can  also  place  additional  mortgages  on  the  property. 

NOT  A CHANGE  IN  TITLE:  In  view  of  these  facts,  it  is  held  that  he  has 
an  interest  or  ownership  which  he  can  dispose  of  at  will  and  it  is  construed  to  be 
“sole  and  unconditional.”  If  the  property  mortgaged  was  the  only  security  for  the 
debt,  it  might  be  claimed,  with  some  justice,  that  the  company  was  liable  for  the 
equity  of  the  insured  only;  but  in  addition  to  the  mortgage,  a note  is  given  and  this 
holds  the  mortgagor  for  the  amount  of  the  mortgage  whether  the  property  is  worth 
it  or  not. 


16 


SOLE  AND  UNCONDITIONAL  OWNEKSHIP 


DEFICIENCY  JUDGMENT:  If  the  insurance  in  case  of  loss,  does  not 
satisfy  the  mortgage  or  the  property  is  sold  under  foreclosure  proceedings  and  does  not 
sell  for  the  required  amount,  the  note  is  held  for  the  deficiency,  and  a deficiency 
judgment  is  given  by  the  court.  For  this  reason  a mortgagee  who  transfers  the 
mortgage  to  a third  party,  has  an  insurable  Interest  to  protect  his  liability  as  en- 
dorser of  the  note. 

POLICY  DOES  NOT  PROHIBIT  MORTGAGE:  There  is  no  clause  in 

the  policy  which  expressly  prohibits  a mortgage  on  real  property  so  the  courts  hold 
that  if  we  intended  that  a mortgage,  without  consent  of  the  company,  should  void  a 
policy,  we  would  have  made  provision  to  that  effect  in  the  contract. 

CHATTEL  MORTGAGE:  A chattel  mortgage  is  different  from  an  ordi- 
nary mortgage  as  the  mortgagor  is  not  permitted  to  dispose  of  or  even  remove  the 
property  mortgaged  without  the  consent  of  the  mortgagee.  There  is  a provision  in  the 
policy  strictly  prohibiting  a chattel  mortgage  and  the  courts  hold  that  it  is  reasonable 
and  valid  and  that  notice  to  and  consent  of  the  company  must  be  obtained  or  the 
policy  is  void.  The  decisions  have,  as  a rule,  been  very  fair  to  the  companies  on  this 
clause,  but  some  of  the  decisions  are  beyond  comprehension.  A chattel  mortgage 
does  Increase  the  hazard  as  it  indicates  financial  embarrassment  of  the  Insured  and 
the  good  risk  becomes  a doubtful  one. 

CONDITIONS  OF  POLICY : The  stipulations  of  the  policy  in  reference 
to  ownership  and  title  read  “This  entire  policy  shall  be  void  (b)  if  the  Interest  of 
the  insured  be  other  than  unconditional  and  sole  ownership,  (c)  if  the  subject  of  in- 
surance be  a building  on  ground  not  owned  by  the  insured  in  fee  simple.”  How  the 
courts  can  construe  these  clauses  to  cover  anything  but  an  absolute,  unconditional  and 
sole  ownership  in  fee  simple,  I cannot  understand;  but  they  place  other  constructions 
upon  them  as  you  will  see  from  the  decisions  which  follow. 

INTEREST  NOT  PROPERTY  INSURED:  It  must  be  remembered  that  it 
is  the  Interest  of  the  Insured  in  and  not  the  property  Itself  which  is  Insured.  The 
Interest  must  be  of  such  a nature  that  it  can  be  computed,  and  capable  of  being 
damaged  or  destroyed.  It  may  be  either  legal  or  equitable,  absolute  or  contingent 
ownership;  but  it  must  be  a valid  one  and  capable  of  being  proven.  Most  courts 
seem  to  reason  that  any  equity  the  Insured  may  have  in  the  property  is  “sole  and 
unconditional.”  This  line  of  reasoning  would  be  correct  and  equitable  if  we  were 
not  expected  to  pay  more  than  the  equity  of  the  Insured  in  the  property  at  the  time 
of  the  loss;  but  in  many  cases  the  court  decided  that  where  the  Insured  had  only 
paid  a small  amount  on  the  contract,  he  was  the  sole  and  unconditional  owner  and 
the  measure  of  loss  and  damage  was  the  full  value  of  the  property. 

DEED  OF  TRUST : The  policy  condition  as  to  sole  and  unconditional 
ownership  is  construed  to  have  reference  only  to  the  quality  of  the  estate  or  interest, 
and  a party  may  be  an  unconditional  sole  owner,  notwithstanding  the  existence  of 


SOLE  AND  UNCONDITIONAL  OWNERSHIP 


17 


any  kind  of  a lien  or  incumbrance,  whether  by  mortgage,  lease,  or  otherwise;  so 
a trust  deed  does  not  necessarily  prevent  the  Insured  from  being  sole  owner. 

Copies  V.  Amer.  Ins.  Co.  60  Minn.  376,  24  Ins.  L.  J.  551  ; 

Morotock  Ins.  Co.  v.  Rodefer.  92  Wa.  747; 

Cleavenger  v.  Franklin,  47  W.  Va.  595; 

Hartford  v.  Enoch,  Ark.  77,  S.  W.  899; 

Huff  V.  Jewltt,  20  Mlsc.  35,  44  N.  Y.  31 1 ; 

Hubbard  V.  Beck,  43  Md.  358; 

Clay  V.  Beck,  43  Md.  358; 

Freozerl  v.  Ins.  Co.,  30  Fed.  Rep.  646; 

Doollver  V.  Ins.  Co.,  128  Mass.  315; 

Judge  V.  Ins.  Co.  ,132  Mass.  521,  11  Ins.  L.  J.  843; 

Omaha  Ins.  Co.  v.  Thompson,  50  Neb.  580; 

Boulware  v.  Ins.  Co.,  77  Mo.  App.  639; 

Light  V.  Ins.  Co.,  105  Tenn.  480; 

Temple  v.  Western  Ins.  Co.,  35  N.  B.  171  ; 

Hare  v.  Hedley,  52  N.  J.  Eq.  545; 

Lancashire  Ins.  Co.  v.  Monroe,  101  Ky.  12; 

Lyscomlng  Ins.  Co.v.  Haven,  95  U.  S.  242,  7 Ins.  L.  J.  249; 

Stelnmeyer  v.  Stelnmeyer,  64  S.  C.  413; 

McClelland  v.  Ins.  Co.,  107  La.  124; 

Wolf  V.  Ins.  Co.,  115  Wis.  402; 

Hawley  v.  Ins.  Co.,  102  Cal.  36,  23  Ins.  L.  J.  874; 

Dumas  V.  Ins.  Co.,  122  App.  D.  C.  245; 

WHEN  INSURED  HAS  EXCLUSIVE  USE:  So  long  as  the  Insured,  un- 
der the  claim  of  right,  has  the  exclusive  enjoyment  of  the  property,  without  any 
assertion  of  right  or  Interest  by  any  other  person,  he  Is  the  sole  and  unconditional 
owner,  notwithstanding  his  title  to  the  real  estate  is  defective. 

Miller  V.  Ins.  Co.,  19  Blatchf.  308,  7 Fed.  Rep.  649; 

Williams  V.  Ins.  Co.,  17  Fed.  Rep.  63,  12  Ins.  L.  J.  374; 

IF  CONTRACT  SHOWS  INTENTION  TO  COVER  OTHER  IN- 
TERESTS: Where  a written  part  of  a contract  of  insurance,  shows  an  intention 
to  cover  and  protect  other  interests  besides  those  specifically  named  In  the  policy,  the 
condition  regarding  sole  and  unconditional  ownership  Is  waived. 

Hogan  V.  Ins.  Co.,  186  U.  S.  423; 

Mark  V.  Ins.  Co.,  24  Hun.  565,  91  N.  Y.  663; 

ACCEPTANCE  OF  POLICY:  If  an  insured  accepts  a policy  In  his  own 
name,  without  qualification  or  otherwise  expressed,  he  affirms  that  his  Interest  is  sole 
and  unconditional  ownership,  and  no  other  person  has  any  Interest  In  It.  If  it  Is  not 
true  the  policy  Is  void. 


■18 


SOLE  AND  UNCONDITIONAL  OWNERSHIP 


Phoenix  v.  Ammasaul,  63  Ark.  187,  37  S.  W.  959; 

Ins.  Co.  V.  Bohn,  65  Fed.  Rep.  165,  24  Ins.  L.  J.  408; 

Lasher  v.  Ins.  Co.,  86  N.  Y.  423; 

Mers.  V.  Ins.  Co.,  68  Mo.  App.  127; 

Overton  v.  Ins.  Co.,  79  Mo.  App.  1 ; 

ASSIGNMENT  OF  POLICY  BEFORE  LOSS:  The  written  consent 

of  a company  to  an  assignment  must  be  obtained  before  a loss  or  the  policy  is  void. 
It  must  be  in  writing  and  made  a part  of  the  policy.  Consent  by  the  company  to 
to  the  assignment  makes  a new  contract  with  the  assignee. 

Alkan  V.  Ins.  Co.,  53  Wis.  136,  11  Ins.  L.  J.  126; 

Frels  V.  Ins.  Co.,  120  Wis.  590,  98  N.  W.  522; 

Carter  v.  Ins.  Co.,  12  Iowa  287; 

Greene  v.  Ins.  Co.,  84,  N.  Y.  572; 

ASSIGNMENT  OF  POLICY  AFTER  LOSS:  The  insured  may  assign 
the  policy  or  any  claim  he  may  have  against  the  insurance  company  without  consent 
of  the  company,  after  a loss;  but  no  more  rights  are  given  the  assignee  than  were 
held  by  the  assignor.  The  company  waives  no  rights  by  the  assignment  for  if  the 
assignor  had  no  claim,  the  assignee  has  none.  The  assignor  or  Insured,  must  make 
the  claim  against  the  company  and  submit  to  examination  under  oath,  if  required. 
The  assignee  cannot  do  it. 

Johnson  v.  Phoenix,  39  Md.  233 ; 

Burger  v.  Ins.  Co.,  71  Pa.  St.  422; 

Pupke  V.  Ins.  Co.,  17  Wis.  378; 

WHAT  IS  SOLE  OWNERSHIP:  To  be  unconditional  and  sole  owner- 
ship, the  Interest  or  ownership  of  the  Insured  must  be  completely  vested,  not  con- 
tingent or  conditional,  nor  in  common  or  jointly  with  others;  but  of  such  nature  that 
the  insured  must  alone  sustain  the  entire  loss  if  the  property  is  destroyed  and  this  is 
so  whether  the  title  is  legal  or  equitable.  This  decision  was  rendered  by  the  Supreme 
Court  of  Florida  and  is  the  nearest  to  being  a correct  definition  of  the  clause  of  any 
I have  seen. 

Phoenix  V.  Hilliard,  39  Ins.  L.  J.  1336; 

HALF  INTEREST : Where  insured  sells  an  half  Interest  in  the  land  upon 
which  building  stands,  such  sale  Is'a  change  in  Interest  of  the  insured  and  the  policy 
is  void. 

Watts  V.  Phoenix  Ha.  S.  C.  39,  Ins.  L.  J.  1329; 

L.  & L.  & G.  Ins.  Co.,  V.  Cochran,  29  Ins.  L.  J.  374; 

INTEREST  AND  TITLE  ARE  SYNONYMOUS:  The  words  interest 
and  title  are  synonymous.  The  test  is  whether  title  has  passed.  Can  the  owner 
•compel  the  party  to  purchase. 

Ark.  F.  Ins.  Co.  v.  Wilson,  et  al.,  29  Ins.  L.  J.  358; 


SOLE  AND  UNCONDITIONAL  OWNEKSHIP 


19 


CLAUSE  REFERS  TO  REALTY:  Where  the  policy  covered  building  and 
its  contents,  the  clause  “Unconditional  and  sole  ownership”  referred  to  realty  and  not 
personal  property. 

Continental  v.  Gardner,  30  Ins.  L.  J.  1051  ; 

FORFEITURE:  Where  Insurer  relies  on  a forfeiture,  the  burden  Is  upon  him 
to  establish  it. 

Cent.  Dig.  1645,  1669,  Dec.  Dig.  646; 

Atlas  V.  Malone,  40  Ins.  L.  J.  1911; 

LIFE  TENANT:  Where  property  was  Insured  by  Life  Tenant  the  court 
held  that  she  was  the  owner;  but  that  the  money  must  be  used  to  replace  or  Invested 
to  give  an  Income  to  the  Life  Tenant. 

Couvls  V.  Ins.  Co.,  30  Ins.  L.  J.  828; 

ESTATE:  A policy  on  an  estate  Is  not  avoided  by  the  settlement  of  the 
estate  and  delivery  of  the  property  to  the  legatees.  The  legatees  were  the  parties 
for  whose  benefit  the  insurance  was  effected. 

Stone  V.  Ins.  Co.  v.  Ins.  Co.,  29  Ins.  L.  J 250; 

CREDITORS:  Where  policy  was  assigned  to  Trustee  for  the  benefit  of  the 
creditors,  the  policy  is  void. 

Northern  Ins,  Co.  v.  Ins.  Co.,  30  Ins.  L.  J.  448; 

Moore  V.  Ins.  Co.,  141  N.  Y.  224; 

POSSESSION  AND  CONTROL:  Title  In  insured  is  presumed  prima  facie 
from  his  possession  and  control  of  the  property. 

Ther.  B.  San.  Co.  v.  Royal,  41  Ins.  L.  J.  481  ; 

CONVEYANCE  TO  DEFRAUD:  The  fact  that  the  property  has  been 
conveyed  in  trust  to  defraud  creditors  did  not  effect  the  title  of  insured  so  as  to 
defeat  the  policy. 

Ins.  Co.  Tenn.  v.  Waller,  35  Ins.  L.  J.  830; 

Hogadone  v.  Ins.  Co.,  Mich.  S.  C.  32  Ins.  L.  J.  760; 

TEMPORARY  POSSESSION:  A decree  of  divorce  granting  insured’s 
wife  temporary  possession  of  the  insured  property  subject  to  being  required  to  vacate 
it  upon  remarriage  or  upon  the  subsequent  order  of  court,  did  not  divest  insured  of 
title  thereto,  or  diminish  his  interest  therein  within  the  meaning  of  the  policy. 

Hix  V.  Sun  et  al„  Ark,  S,  C,  39  Ins.  L.  J.  1064; 

TAX  DEED:  A party  holding  a Tax  Deed  has  an  insurable  interest  to  the 
amount  of  his  tax  lien  only. 

Wilson  V.  Germania,  Kan.  C.  A.  40  Ins.  L.  J.  55; 

WILL  OR  DESCENT : A change  of  title  by  will  or  descent  does  not  avoid 
the  policy. 

Towle  V.  Ins.  Co.,  Me.  S.  C.  40  Ins.  L.  J.  389; 


•20 


SOLE  AND  UNCONDITIONAL  OWNEESHIP 


TRANSFER  WITHOUT  CONSENT:  A transfer  of  title  without  consent 
•of  the  company  voids  the  policy. 

Melcher  v.  Ins.  Co..  M.  E.  S.  C.  32  Ins.  L.  J.  871  ; 

Queen  v.  Pendola,  Ark.  S.  C.  39  Ins.  L.  J.  1176; 

AS  INTEREST  MAY  APPEAR:  The  conditions  of  a fire  policy,  issued 
to  Insured  alone,  when  the  property  was  owned  by  him  and  his  wife,  are  waived  by 
the  words  “As  Interest  may  appear.” 

Bakhaus  v.  Caledonian,  Mary.  C.  A.  39  Ins.  L.  J.  1431  ; 

ORAL  CONTRACT : An  oral  contract  Is  not  enforclble  unless  all  the 
essential  elements  have  been  agreed  upon.  Such  as  when  the  risk  Is  to  commence;  the 
amount  to  be  written;  upon  what  It  Is  to  cover;  the  rate  and  premium;  and  the 
parties  to  the  contract. 

Ogle  Lake  Shingle  Co.  v.  Nat.  Lumber  Ins.  Co.,  Wash.  S.  C.  41  Ins.  L.  J. 
1033; 

PARTNERSHIP:  Real  Estate  acquired  for  partnership  with  partnership 

means,  and  used  in  Its  business,  gives  the  partnership  an  “insurable  Interest”  to 
warrant  a policy  insuring  It  against  loss  by  fire.  An  equitable  title  to  real  estate 
gives  an  insurable  Interest  to  warrant  a policy  In  the  name  of  its  owner. 

Scott,  et  al.  V.  Dixie,  W.  Va.  S.  C.  41  Ins.  L.  J.  1039; 

PAROL  GIFT : Where  an  Insured  takes  possession  of  and  makes  valuable 
Improvements  to  property  obtained  under  a “parol  gift”  he  Is  the  sole  and  uncondi- 
tional owner. 

Mass.  V.  Ins.  Co.,  Mich.  S.  C.  36  Ins.  L.  J.  600; 

HOMESTEAD:  A homestead,  although  the  final  proof  has  not  been  made.  Is 
held  to  be  “sole  and  unconditional  ownership”. 

Allen  et  al.  v.  Phoenix,  Id.,  S.  C.  36  Ins.  L.  J.  289; 

IF  TITLE  NOT  ABSOLUTE:  If  the  title  to  the  property  Is  not  absolute, 
the  policy  is  void. 

F.  & M.  Ins.  Co.  V.  Hohn,  Neb.  S.  C.  32  Ins.  L.  J.  1017; 

POLICY  VOID:  If  the  policy  shows  the  Insured  to  be  the  sole  and  uncondi- 
tional owner,  and  he  is  not,  the  policy  Is  void. 

Hebner  v.  Ins.  Co.,  157  111.  144; 

Overton  v.  Ins.  Co.,  79  Mo.  App.  1 ; 

Barnard  v.  National,  27  Mo.  App.  26; 

Fire  Assn.,  v.  Calhoun,  28  Tex.  Civ.  App.  409; 

Breedlove  v.  Ins.  Co.,  124  Cal.  164,  28  Ins.  L.  J.  447; 

McCormick  v.  Orient,  86  Cal.  260; 

Tyree  v.  Ins.  Co.  W.  Va.,  46  S.  E.  Rep.  706; 

BANKRUPTCY : It  has  been  held  that  the  policy  Is  not  rendered  void  be- 
<ause  a receiver  in  Involutary  banrkuptcy  took  possession  of  the  premises,  placed  a 


SOLE  AND  UNCONDITIONAL  OWNERSHIP 


21 


watchman  in  charge  and  took  out  insurance  in  his  own  name;  the  receiver  taking 
charge  of  the  property  until  the  proceedings  are  dismissed,  or  a Trustee  in  bank- 
ruptcy is  appointed  under  the  Bankruptcy  Act  1898; 

Marcello  v.  Concordia,  Pa.  S.  C.  41  Ins.  L.  J.  1163; 

So.  Pants  Co.  V.  Ins.  Co.,  No.  C.  S.  C.  41  Ins.  L.  J.  1219; 

VENDEE  AND  VENDOR:  A Vendee  in  possession  under  contract  to  pur- 
chase is  the  “sole  and  unconditional  owner”  and  the  Vendor  by  making  the  con- 
tract caused  a “change  in  title”. 

Brighton  Beach  R.  Assn.  v.  Home  113  App.  Div.  728,  99  N.  Y.  S.  219; 

Gorsch  V.  Niagara,  N.  Y.  S.  C.,  40  Ins.  L.  J.  1320; 

McCullough  V.  Home  Cal.  S.  C.,  38  Ins.  L.  J.  1003; 

Where  a Vendee  is  in  possession  and  exercising  the  right  of  ownership,  he  is 
the  “sole  and  unconditional  owner”. 

Penn  Ins.  Co.  v.  Hughes,  30  Ins.  L.  J.  821  ; 

A purchaser  of  insured  property  cannot  recover  for  loss  unless  the  policy  is 
assigned  to  him  by  the  Company.  The  holder  of  a fire  Insurance  policy  is  not 
entitled  to  recover  where  he  has  parted  with  his  interest  in  the  property.  Policy  can 
be  assigned  before  a loss  but  with  the  consent  of  the  company  only. 

Davis  v.  Ins.  Co.,  Iowa  S.  C.  41  Ins.  L.  J.  969; 

Bartling  v.  Ins.  Co.  Iowa  S.  C.,  41  Ins.  L.  J.  974; 

A Vendee  under  a conditional  sale  is  liable  for  loss  or  damage  by  fire,  his  in- 
surable interest  is  not  merely  the  amount  paid  on  the  contract,  but  for  the  full 
value. 

Ryan  v.  Agricultural,  Mass.  S.  C.  34  Ins.  L.  J.  472; 

The  Vendor  has  an  insurable  interest  for  the  balance  of  the  purchase  price. 

Continental  v.  Brooks,  31  Ins.  L.  J.  348; 

Id.  83a  Am.  & Eng.  Enc.  Law  313-315; 

Where  Vendor  has  transferred  his  legal  title,  he  cannot  recover. 

Bartling  v.  Ins.  Co.,  Iowa  S.  C.  41  Ins.  L.  J.  974; 

ESCROW:  Where  Vendor  has  agreed  to  sell  and  papers  are  in  escrow  and 
the  properly  burns  before  the  conditions  of  the  escrow  are  completed,  it  is  not  a 
change  of  title. 

Pomeroy  v.  Aetna,  Kan.  S.  C.  41  Ins.  L.  J.  465; 

Swank  V.  Ins.  Co.,  Iowa  S.  C.  34  Ins.  L.  J.  367; 

DEED:  The  execution  and  delivery  of  a bond  for  a deed  was  not  a transfer 
of  title. 

Phoenix  v.  Caldwell,  30  Ins.  L.  J.  116; 

Contra. 

Adams  V.  Ins.  Co.,  Mass.  S.  C.  41  Ins.  L.  J.  473; 


SOLE  AND  UNCONDITIONAL  OWNERSHIP 


Where  insured  gives  a deed  of  assignment,  altho’  he  Is  left  In  possession  of  the 
property,  the  policy  is  void. 

Ohio  Farmers  Ins.  Co.  v.  Waters,  31  Ins.  L.  J.  71  ; 

A deed  not  delivered  until  after  Grantor’s  death,  is  not  a change  of  title  within 
the  meaning  of  the  policy. 

Schaeffner  v.  Anchor  Ins.  Co.,  31  Ins.  L.  J.  245; 

A conveyance  of  the  property  altho’  there  was  no  consideration,  voids  the 
policy. 

Home  Ins.  Co.  v.  Collins,  30  Ins.  L.  J.  435; 

Ins.  Co.  V.  Jansen,  56  Neb.  284; 

McCrea  v.  Purment,  16  Wend.  460; 

Morse  V.  Shattuck,  4 N.  H.  229; 

Kendrick  v.  Ins.  Co.,  124  N.  C.  315; 

Beach  V.  Crosby,  Minn.  S.  C. 

One  in  possession  under  a conveyance  of  title  in  fee  simple,  is  the  “Sole  and 
unconditional  owner’’,  altho’  there  was  a Vendor’s  lien. 

North  Amer.  v.  Pitts.  Miss.  S.  C.,  38  Ins.  L.  J.  805; 

Where  a deed  is  given  to  secure  a debt  it  must  be  considered  in  the  nature  of  a 
mortgage  and  it  is  not  a change  of  title  within  the  meaning  of  the  policy. 

Athens  V.  Evans,  Ga.  S.  C.  40  Ins.  L.  J.  1931  ; 

Sun  Fire  v.  Clark,  53  Ohio  St.  414;  42  N.  E.  Rep.  24,  25  Ins.  L.  J.  333; 

German  Ins.  Co.  v.  Gibe,  162  111.  251,  44  N.  E.  Rep.  490; 

Where  insured  gave  a deed,  absolute  on  its  face,  although  insured  claimed  it 
was  given  to  secure  a mortgage,  the  policy  is  void.  It  is  a change  of  title. 

Watson  V.  Ins.  Co.,  N.  C.  S.  C.  75,  So.  E.  1105; 

.MORTGAGE:  The  acquisition  of  the  legal  title  to  the  property  by  the 

mortgagee  is  not  such  a change  of  ownership  as  will  void  policy. 

Fort  Scott  Bldg.  & Loan  v.  Palatine,  Kan.  S.  C.  15  Ins.  L.  J.  919; 

Dodge  V.  Ins.  Co.,  Kan.  App.  415; 

Ins.  Co.  V.  Ward,  50  Kan.  346; 

Ins.  Co.  V.  Boardman,  58  Kan.  339; 

Most  courts  hold  that  where  the  mortgagor  sells  the  property  to  the  mortgagee 
or  where  the  mortgagee  acquires  title  no  matter  how  it  is  accomplished,  it  is  a change 
of  title  and  if  the  policy  is  not  transferred  it  is  void.  This  is  good  law  and  follows 
the  intentions  and  conditions  of  the  policy. 

Boston  Co-op.  Bk.  V.  Ins.  Co.,  Mass  S.  C.  39  Ins.  L.  J.  599; 

Atlas  Reduction  Co.  v.  New  Zealand,  34  Ins.  L.  J.  805; 

Where  the  insured  or  mortgagor  sold  the  property  without  the  consent  of  the 
insurer,  the  policy  is  void  except  as  to  the  mortgagee  for  an  amount  necessary  to  pro- 
tect the  mortgage. 


SOLE  AND  UNCONDITIONAL  OWNERSHIP 


2S 


Flint  et  al.  v.  Westchester,  Mass.  S.  C.  40  Ins.  L.  J.  509; 

A mortgage  on  real  property  does  not  change  the  title.  The  mortgagor  Is  still 
the  sole  and  unconditional  owner. 

Wolf  V.  Ins.  Co.,  Wis.  S.  C.  32  Ins.  L.  J.  139; 

AGENT : The  following  citations  refer  only  to  cases  where  the  agent  had 
knowledge  of  the  conditions  of  the  title  and  did  not  inform  the  company. 

If  the  agent  issues  a policy  knowing  the  Insured  is  Trustee  and  not  owner,  the 
clause  in  reference  to  “Sole  and  unconditional  ownership”  is  waived. 

Keane  v.  Ins.  Co.,  40  Ins.  L.  J.  993 ; 

Where  agent  knew  insured  held  title  under  bond;  that  Insured’s  Interest  was  a 
homestead  entry;  that  building  was  on  leased  ground  or  a Railroad  right  of  way; 
that  insured  was  an  Executor  and  not  owner;  that  foreclosure  proceedings  had  been 
commenced;  that  personal  property  was  mortgaged;  and  that  insured  had  sold  the 
property  under  contract,  the  conditions  of  the  policy  as  to  ownership  were  waived. 
Clapp  V.  Ins.  Co.,  29  Ins.  L.  J.  468; 

Queen  Ins.  Co.  v.  Taylor,  40  Ins.  L.  J.  1914; 

Farley  v.  Ins.  Co.,  Wis.  S.  C.  41  Ins.  L.  J.  972; 

Shawnee  v.  Chapman  et  ah,  Tex.  C.  C.  A.  40  Ins.  L.  J.  366; 

Knowledge  of  agent  before  policy  is  written,  is  knowledge  of  the  company. 
Dupuy  V.  Delaware,  63  Fed.  R.  680,  24  Ins.  L.  J.  161  ; 

Home  Ins.  Co.  v.  Mendenhall,  164  111.  458,  45  N.  E.  Rep.  569; 

Wagner  v.  Westchester,  92  Tex.  549,  50  S.  W.  R.  569; 

Mers  V.  Franklin,  68  Mo.  127,  8 Ins.  L.J.  505; 

Emery  v.  Ins.  Co.,  52  Me.  322; 

Leach  V.  Republic  Ins.  Co.,  58  N.  H.  245; 

Peck  V.  Ins.  Co.,  22  Conn.  575; 

Ayers  v.  Home  Ins.  Co.,  21  Iowa  185; 

Gates  V.  Penn  Ins.  Co.,  10  Hun.  489  (N.  Y.)  ; 

Wheeler  v.  Traders,  62  N.  H.  326,  450; 

Cal.  Ins.  Co.  V.  Union  Comp.  Co.,  133  U.  S.  387,  19  Ins.  L.  J.  385; 

Dietz  V.  Prov.  Wash.,  31  W.  Va.  851,  8 S.  E.  R.  616; 

German  Ins.  Co.  v.  Miller,  39  111.  App.  633; 

Brown  V.  Ins.  Co.,  86  Ala.  189,  5 So.  500; 

Williamson  v.  Ins.  Co.,  84  Ala.  106; 

Pope  V.  Ins.  Co.,  31  Ins.  L.  J.  337; 

Ins.  Co.  V.  Copeland,  86  Ala.  551  ; 

Ins.  Co.  V.  Norton,  96  U.  S.  234; 

Strause  v.  Ins.  Co.,  30  Ins.  L.  J.  553; 

Phoenix  v.  Ceaphus,  Okl.  S.  C.  41  Ins.  L.  J.  485; 

Gorsch  V.  Ins.  Co.,  N.  Y.  S,  C.  41  Ins.  L.  J.  129; 


24 


SOLE  AND  UNCONDITIONAL  OWNEKSHIP 


Athens  V.  Ledford,  D.  S.  C 39  Ins.  L.  J.  1084; 

Slollar  V.  Ins.  Co.,  N.  D.  S.  C.  41  Ins.  L.  J.  1361  ; 

Vir.  Ins.  Co.  v.  Richmond  Mica  Co.  Vir.  S.  C.  33  Ins.  L.  J.  361  ; 

LEASED  GROUND:  Where  the  building  was  on  leased  ground  the  policy 
is  void. 

Wyandotte  Brew.  Co.  v.  Hartford,  38  Ins.  L.  J.  98; 

A policy  was  issued  covering  upon  building  stock,  office  supplies,  etc.  No  writ- 
ten or  oral  representation  was  made  by  the  insured  and  no  inquiries  were  made  by 
the  Company.  After  a loss  occurred  it  was  learned  that  the  building  stood  upon 
leased  ground.  Held,  that  the  provision  with  reference  to  ownership  and  title  applied 
to  the  existing  conditions  and  not  future  changes  in  title.  The  insured  by  accepting 
the  policy  in  question,  is  charged  with  notice  of  its  contents,  and  is  bound  by  its 
conditions;  the  company,  by  issuing  the  policy  without  inquiry,  did  not  waive  the 
conditions  as  to  title  or  ownership.  It  was  incumbent  upon  the  insured  to  disclose  the 
nature  of  his  title. 

Millers  & Mfg.  Ins.  Co.  v.  Parsons  Rich  & Co.,  Min.  S.  C.  35  Ins.  L.  J.  401  ; 

McFarland  v.  St.  Paul,  46  Minn.  519; 

Collins  V.  St.  Paul,  44  Minn.  440; 

The  Insured  had  an  Interest  in  a building,  though  the  building  was  owned  by 
his  mother,  where  he  made  improvements  and  was  in  possession  under  an  oral  agree- 
ment that  he  might  have  a store  room  therein,  at  a monthly  rental,  as  long  as  his 
mother  should  live.  The  court  held,  “Where  a leasehold  Interest  is  insured  the 
value  for  the  unexpired  term  is  the  measure  of  damage.  The  amount  of  the  loss  was 
properly  ascertained  by  taking  the  present  worth  60  days  after  proof  of  loss,  of  the 
aggregate  amount  representing  the  difference  between  the  reasonable  rental  value  and 
the  rental  cost  to  the  Insured  during  the  mother’s  expectancy  of  life.” 

The  above  is  the  correct  and  equitable  way  of  ascertaining  a loss  under  a 
leasehold  Interest. 

Getchell  V.  Ins.  Co.,  Me.  S.  C.  41  Ins.  L.  J.  1482; 

Cent  Dig.  1280,  1281  ; Dec.  Dig.  503; 

PARTNERSHIP:  Where  a new  partner  is  taken  into  the  firm,  it  is  a change 
of  Interest  and  voids  the  policy. 

Germania  v.  Home,  144  N.  Y.  195,  24  Ins.  L.  J.  382; 

Card  V.  Phoenix,  4 Mo.  App.  424; 

Malley  v.  Ins.  Co.,  51  Conn.  222,  13  Ins.  L.  J.  38; 

Royal  V.  Martin,  192  U.  S.  149,  24  Sup.  St.  247; 

Where  a third  party  acquires  an  interest  in  the  profits  only.  It  Is  not  a change  of 

title. 

Hanover  v.  Lewis,  28  Fla.  209,  21  Ins.  L.  J.  316; 


SOLE  AXD  UNCONDITIONAL  OWNERSHIP 


25 


CONTRACT  TO  PURCHASE:  A mere  option  contract  for  sale,  under 
which  nothing  is  done  before  a loss,  is  not  a change  of  title.  * 

House  V.  Ins.  Co.,  Iowa  S.  C.  39  Ins.  L.  J.  875; 

A written  agreement  to  sell  and  convey  the  property  in  fee  to  tenant  who  was 
in  possession,  upon  the  payment  of  the  stipulated  price  (a  portion  of  which  was  then 
paid)  it  was  held  that  such  acts  caused  a change  in  interest,  title  and  possession  of 
the  subject  of  insurance  sufficient  to  avoid  the  policy.  Although  the  Vendors  there- 
after still  retained  the  legal  title  to  the  land,  they  held  it  as  trustees  for  the  Vendee, 
who  became  the  owner  in  equity. 

Graunauer  et  al.  v.  West  Ins.  Co.,  N.  J.  C.  A.  35  Ins.  L.  J.  197; 

The  execution  of  a Contract  to  sell  is  a change  of  title  and  avoids  policy. 

Gorsch  V.  Ins.  Co.,  N.  Y.  S.  C.  39  Ins.  L.  J.  1320; 

A purchaser  under  a contract  to  purchase  is  the  unconditional  and  sole  owner 
within  a fire  policy,  though  the  purchase  money  has  not  been  paid  in  full. 

Conn.  Ins.  Co.  v.  Colorado  L.  M.  & M.  Co.,  Col.  S.  C.  40  Ins.  L.  J.  1716; 

Matthews  V.  Ins.  Co.,  Wis.  S.  C.  31  Ins.  L.  J.  1065; 

Barn  v.  Home,  Iowa  S.  C.  32  Ins.  L.  J.  737 ; 

Where  the  owner  of  buildings,  states  in  his  application,  that  he  has  on  interest  • 
in  land  under  a contract  for  a deed,  he  can  recover,  the  Insurer  being  estopped  to 
assert  Invalidity  of  the  policy. 

Coats  V.  Ins.  Co.,  Wis.  S.  C.  41  Ins.  L.  J.  1053; 

Where  the  Executor  of  an  estate  made  a contract  of  sale  which  provided  for 
the  assignment  of  the  policy  and  delivery  of  possession  of  the  property  to  the 
vendee  at  a future  date  upon  payment  of  the  purchase  price,  held,  title  had  not 
passed  and  Company  was  liable. 

Zeltler  v.  Concordia,  Mich.  S.  C.  41  Ins.  L.  J.  1061  ; 

A contract  of  sale  transferring  possession  and  agreeing  to  convey  title,  voids  the 
policy  as  it  is  a change  of  ownership. 

Vancouver  Nat.  Bank  v.  Ins.  Co.,  U.  S.  C.  C.  37  Ins,  L.  J.  27; 

Zenor  v.  Hayes,  111.  S.  C.  37  Ins.  L.  J.  142; 

Ex  Foundry  Co.  v.  Western,  Mich.  S,  C.  33  Ins.  L.  J.  1016; 

WHEN  THE  INSURED  IS  NOT  SOLE  AND  UNCONDITIONAL 
OWNER;  An  undivided  part  Interest  (1)  or  an  Interest  held  jointly  with  some 
one  else,  is  not  sole  and  unconditional  ownership,  (2)  nor  is  the  Interest  of  a mort- 
gagee such  an  ownership  (3)  ; a conditional  gift  (4)  ; or  the  Interest  of  one  partner 
in  the  firm  property  is  not  sole  ownership  (5)  ; the  Interest  of  a purchaser  of  prop- 
erty at  a Judicial  sale,  which  had  not  been  confirmed  by  the  court,  is  not  uncon- 
ditional ownership  (6)  ; the  individual  Interest  of  a stockholder  in  the  property 
owned  by  the  corporation,  is  not  sole  and  unconditional  (7) ; a deed  which  in 
reality  is  Intended  as  security  for  a debt,  does  not  convey  title  (8)  ; though  it  may  be 


2G 


SOLE  AND  UNCONDITIONAL  OWNEESHIP 


otherwise  as  to  a bill  of  sale  (9)  ; The  ownership  of  property  sold  on  judgment  or 
execution,  where  the  time  for  redemption  has  not  expired,  is  not  sole  and  uncondi- 
tional (10);  A life  Interest  is  not  sole  and  unconditional  ownership  (II);  a sur- 
viving partner  is  not  the  sole  owner  of  the  partnership  property  (12). 

1—  Hebner  v.  Palatine,  157  111.  144,  41  N.  E.  Rep.  627; 

Palatine  v.  Dickenson,  116  Ga.  794,  43  S.  E.  Rep.  52; 

Sish  V.  Citizens,  16  Ind.  App.  565,  45  N.  E.  Rep.  26  Ins.  L.  J.  369; 
Springfield  v.  Green,  36  S.  W.  Rep.  143; 

Miller  V.  Ins.  Co.,  46  Mich.  463,  10  Ins.  L.  J.  581  ; 

L.  L.  & G.  V.  Cochrane,  77  Miss.  348; 

Bradley  v.  Ins.  Co.,  90  Mo.  App.  369; 

Ger.  Amer.  v.  Pari,  53  S.  W.  Rep.  442 ; 

Fire  Assn.  v.  Calhoun,  28  Tex.  Civ.  App.  409; 

Adewa  V.  Ins.  Co.,  36  La.  Ann.  660; 

Noyes  V.  Hartford,  54  N.  Y.  668; 

Columbian  Ins.  Co.  v.  Lawrence  2 Pet.  25; 

2 —  Schwedel  v.  Humboldt,  158  Pa.  St.  459,  23  Ins.  L.  J.  240; 

3 —  Ardway  v.  Chace,  57  N.  J.  Eq.  478; 

4 —  Dwg.  Hse.  Ins.  Co.  v.  Dovvdall,  49  111.  App.  33; 

5—  McFetridge  v.  Phoenix,  84  Wis.  200,  54  N.  W.  Rep.  326,  22  Ins.  L.  J.  21  1 ; 

6—  Hartford  v.  Heating,  86  Md.  130,  38  Atl.  Rep.  29,  27  Ins.  L.  J.  406; 

7 —  Ins.  Co.  V.  Bohn,  65  Fed.  Rep.  165  24  Ins.  L.  J.  408; 

McCormick  V.  Ins.  Co.,  66  Cal.  361,  14  Ins.  L.  J.  373; 

8 —  Williamson  v.  Orient,  100  Ga.  791  ; 

Alberts  V.  Ins.  Co.,  117  Ga.  854,  45  S.  E.  R.  282; 

9 —  Kronk  V.  Ins.  Co.,  91  Pa.  St.  300; 

Cook  V.  Lion,  67  Cal.  368,  14  Ins.  L.  J.  863; 

10 —  Reaper  City  Ins.  Co.  v.  Brennan,  58  111.  158; 

11 —  Garver  v.  Ins.  Co.,  69  Iowa  202; 

Davis  V.  State,  67  Iowa  494,  15  Ins.  L.  J.  533; 

Collins  V.  St.  Paul,  44  Minn.  440,  20  Ins.  L.  J.  179; 

12 —  Crescent  Ins.  Co.  v.  Camp,  71  Tex.  503; 

CONCLUSION:  From  the  decisions  just  read  we  must  conclude  that  a mort- 
gage on  real  estate;  a trust  deed  to  secure  a debt;  a transfer  to  defraud  creditors; 
a contract  to  sell,  but  not  completed;  a change  of  title  by  will  or  descent,  is  not  a 
change  of  title  or  ownership  which  will  avoid  the  policy. 

That  a vendee  in  possession,  under  contract  to  purchase  is  a sole  and  uncondi- 
tional owner. 

It  is  therefore  necessary  for  us  to  protect  the  rights  of  our  Companies  by  so 


SOLE  AND  UNCONDITIONAL  OWNEESHIP 


27 


wording  our  policies  that  we  will  not  be  called  upon  to  pay  a loss  to  a party  not 
properly  entitled  to  it. 

I would  therefore  suggest  that  all  policies  covering  property  which  Is  mort- 
gaged, be  made  payable  to  the  mortgagee;  that  where  property  Is  being  purchased 
under  a contract  for  a deed  or  on  the  Installment  plan,  that  both  the  Grantor  and 
the  Grantee  be  made  the  insured;  that  where  a building  Is  on  leased  ground  and  the 
building  reverts  to  the  land  owner  at  the  expiration  of  the  lease  that  both  the 
Leasor  and  Leasee  be  made  the  Insured.  That  an  Inspection  should  be  made  of 
every  risk  which  is  encumbered  by  mortgage,  bought  under  contract  or  upon  leased 
ground  in  order  that  the  Interest  of  all  parties  may  be  known  to  the  Company,  and 
the  value  of  the  property  established.  The  reason  for  this  conclusion  is  that  the 
first  clause  of  the  policy  conditions  reads  “The  Company  will  not  be  liable  beyoud 
the  actual  cash  value  of  the  Interest  of  the  Insured  in  the  property  at  the  time  of 
loss  or  damage”.  If  the  insured  is  not  bound  to  fulfill  the  contract  or  the  actual  title 
has  not  passed,  the  Company  would  only  be  liable  for  the  amount  the  insured  had 
paid  on  the  contract  as  that  is  all  he  could  lose.  This  is  true  of  personal  or  real 
property  so  to  properly  protect  the  interests  of  all  parties  concerned,  the  policy 
should  be  made  in  all  their  names. 

Where  the  loss  is  honest  and  no  effort  has  been  made  to  deceive  the  Company, 
we  should  do  by  the  claimant  as  we  would  like  to  be  done  by.  If  the  Insured  has 
Insured  the  property  in  good  faith,  believing  all  interests  were  properly  covered,  and 
if  the  Company  would  have  accepted  the  risk  under  the  conditions  as  they  really 
existed,  then  it  is  better  for  the  Company  to  reform  its  policy  and  pay  the  Insured 
what  is  equitably  due  him,  than  to  have  the  court  do  so.  It  is  only  when  the  claim 
is  dishonest  that  we  should  take  advantage  of  every  technicality,  and  to  be  able  to 
see  them  when  they  really  exist,  we  should  keep  thoroughly  posted  as  to  all  the  late 
court  decisions.  Insurance  Law  is  a most  interesting  study  and  will  repay  anyone 
who  follows  it  closely. 


BIBLIOGRAPHY. 

J.  Griswold — Fire  Underwriters,  Text  Book. 

Geo.  Richards,  M.  A. — Law  of  Insurance. 

D.  Ostrander — Law  of  Fire  Insurance. 

John  Wilder  May — Law  of  Insurance. 

Geo.  A.  Clement — The  Law  of  Fire  Insurance. 

Roger  W.  Cooley — Briefs  on  the  Law  of  Insurance. 

Wallace  Nesbit — Insurance  Institute  of  Toronto  1902.  Page  62. 

Jas.  J.  Joyce — Treatise  on  Insurance. 

Geo.  E.  Mead — Journal  of  the  Institute  of  Great  Britain  and  Ireland.  Vol  14, 
Page  370. 


